Tax News

CCH (cch.taxgroup.com) reports:

  President Bush on June 17 signed the Heroes Earnings Assistance and Relief Tax (HEART) Act (HR 6081). The legislation includes tax cuts for members of the military who are receiving combat pay, saving for retirement or purchasing their own homes. Specifically, the bill will ease rules in order to allow military families to qualify for the earned income tax credit, make penalty-free withdrawals from their pension plans and access unspent amounts held in their health flexible spending arrangements.

  The measure also will enable thousands of active-duty military families to qualify for economic stimulus payments. Under prior law, some military families were denied economic stimulus payments because one spouse is an immigrant and does not have a social security number.

  The military tax relief bill, passed by the House on May 19 (TAXDAY, 2008/05/21, C.1) and the Senate on May 22 (TAXDAY, 2008/05/27, C.1), contains several provisions that are retroactive to January 1, 2008, or earlier. They became effective on June 17. The provisions include the new employer's differential wage payments credit; flexible spending account distributions and death benefit rollovers to Roth IRAs and Educational Savings Accounts.

  The bill signing date also determines the effective date for individuals whose expatriation date is on or after the date of enactment. It also controls the effective date of the foreign contractor employment tax-avoidance measure that is effective for services performed in calendar months beginning more than 30 days after the date of enactment.

  By Paula Cruickshank, CCH News Staff

SFC Release: Baucus, Grassley Military Tax Relief Package Becomes Law